U.S. Supreme Court Won't Hear Oklahoma Income Tax Law Case

U.S. Supreme Court Won't Hear Oklahoma Income Tax Law Case

Article excerpt

Royalty taxes will stay put. The U.S. Supreme Court has refused
to hear a case challenging the constitutionality of an Oklahoma law
requiring that income taxes be withheld from payments to royalty-
interest owners who reside out of state.

The court's decision lets stand a March Oklahoma Court of Civil
Appeals opinion that upheld the law, which requires producers to
withhold 5 percent from royalty payments to out-of-state interest
owners, to be remitted to the Oklahoma Tax Commission for state
income taxes.

Tax commission spokesperson Paula Ross said the agency was
pleased with the high court's decision to decline to hear the case,
but said the commission would have no further comment until it
receives official word from the justices.

The case involved a lawsuit brought by the Panhandle Producers
and Royalty Owners Association and others over the 2000 law. The
plaintiffs asked the Supreme Court in October to consider the case,
on which the justices declined to grant certiorari on Monday.

An Oklahoma trial court granted summary judgment to the tax
commission, and the state appeals court affirmed.

Panhandle Producers, which represents royalty owners in Texas,
Oklahoma and Kansas, argued that the law is unconstitutional because
it requires income tax payments to be withheld only from royalty
owners living in other states.

Nonresidents may obtain a refund of withheld amounts that exceed
the taxes they actually owe.

Association attorneys argued that the law discriminates in two
ways: by depriving nonresidents of the use of their money between
the time taxes are taken out and when they receive any refund, and
by requiring them to file returns to claim refunds of overpaid
taxes, while Oklahomans with low incomes are not required to file
returns. …